- Medicare Part D is Medicare’s prescription drug coverage.
- You may purchase a Medicare Part D plan if you qualify for Medicare.
- Part D plans have a list of drugs they cover called a formulary, so you can tell if a plan covers your prescriptions.
- Some Medicare Part D plans are included in Medicare Advantage plans.
Choosing the right Medicare plan is important. With different coverage options, copays, premiums, and deductibles, it can be frustrating to figure out your best option.
Medicare is the government-funded health insurance plan for people 65 and older in the United States. It has several parts that cover different types of health and medical costs.
Medicare Part D is also known as Medicare’s prescription drug coverage. It helps pay for medications not covered in parts A or B.
Even though the federal government pays 75 percent of medication costs for Part D, covered individuals still have to pay premiums, copays, and deductibles.
Coverage and rates can vary based on the plan you choose. It’s important to check all the options before choosing a Medicare Part D plan.
Fast facts about Medicare Part D
- It’s a prescription medication benefits plan for those eligible for Medicare.
- You must be enrolled in either Medicare Part A or Part B to be eligible.
- Medicare Part D coverage is optional.
- You must enroll in Part D between October 15 and December 7. Coverage is not automatic and late enrollment penalties may apply.
- State enrollment assistance is available.
- Medications covered are based on the individual plan formularies (list of covered drugs).
All plans must cover “standard” medications decided by Medicare. Coverage is based on what most people on Medicare are taking. Each plan has its own list of medications the plan covers.
Most plans cover the majority of vaccines with no copay.
It’s important when you choose a Medicare Part D plan to make sure the medications you take are covered. This is especially important if you take any specialty or expensive brand-name medications.
All plans generally have at least two and often many more medications from the most prescribed medication classes and categories.
If your doctor prescribes a medication not on the list, they must explain why an exception is needed. Medicare requires a formal letter to the insurance company explaining why the medication is required. There’s no guarantee the exception will be allowed. Each case is decided individually.
Beginning January 1, 2021, if you take insulin, your insulin could cost $35 or less for a 30-day supply. Use Medicare’s find a plan tool to compare Medicare Part D plans and insulin costs in your state. You can enroll in a Part D plan during open enrollment (October 15 through December 7).
A medication plan can change the medications or pricing on their list at any time for several reasons, such as:
- a generic of a brand becomes available
- the price of brand may change if a generic becomes available
- a new medication has become available or there’s new data about this treatment or medication
Over the counter medications, vitamins, supplements, cosmetic, and weight loss medications aren’t covered by Part D.
Prescription drugs not covered by Medicare Part D include:
- fertility drugs
- medications used to treat anorexia or other weight loss or gain when these conditions aren’t part of another diagnosis
- medications prescribed solely for cosmetic purposes or hair growth
- medications prescribed for the relief of cold or cough symptoms when these symptoms aren’t a part of another diagnosis
- medications used to treat erectile dysfunction
Medications are expensive and costs keep rising. According to the Centers for Medicare and Medicaid (CMS), spending for prescription medications went up on average 10.6 percent every year between 2013 and 2017.
If you’re turning age 65 and are eligible for Medicare, Part D is one option to help cover the cost of prescription medicines.
If you’re eligible for Medicare, you’re eligible for Part D. To be eligible for Medicare, you must:
- be at least 65 years old
- have received Social Security disability payments for at least 2 years, although this waiting period is waived if you receive a diagnosis of amyotrophic lateral sclerosis (ALS) and will be eligible the first month you receive a disability payment
- have received a diagnosis of end-stage renal disease (ESRD) or kidney failure and need to have dialysis or a kidney transplant
- be under age 20 with ESRD and have at least one parent eligible for Social Security benefits
There are hundreds of plans to choose from offered by private insurance companies. Plans can offer just prescription medication coverage or options that cover more services like Medicare Advantage.
The best plan for you depends on:
- medications you currently take
- any chronic health conditions you have
- how much you want to pay (premiums, copays, deductibles)
- if you need specific medications covered
- if you live in different states during the year
Costs depend on the plan you choose, coverage, and out-of-pocket costs. Other factors that affect what you may pay include:
- your location and plans available in your area
- type of coverage you want
- coverage gaps also called the “donut hole“
- your income, which can determine your premium
Costs also depend on medications and plan levels or “tiers.” The cost of your medications will depend on which level your medications fall under. The lower the level, and if they’re generic, the lower the copay and cost.
Here are a few examples of estimated monthly premium costs for Medicare Part D coverage:
- New York, NY: $7.50–$94.80
- Atlanta, GA: $7.30–$94.20
- Dallas, TX: $7.30–$154.70
- Des Moines, IA: $7.30–$104.70
- Los Angeles, CA: $7.20–$130.40
Your specific costs will depend on where you live, the plan you choose, and the prescription medications you’re taking.
The donut hole is a coverage gap that begins after you pass the initial coverage limit of your Part D plan. Your deductibles and copayments count toward this coverage limit, as does what Medicare pays. In 2021, the initial coverage limit is $4,130.
The federal government has been working to eliminate this gap and, according to Medicare, you’ll only pay 25 percent of the cost of covered medications when you’re in the coverage gap in 2021.
There’s also a 70 percent discount on brand-name medications while you’re in the donut hole to help offset costs.
Once your out-of-pocket expenses reached a certain amount, $6,550 in 2021, you qualify for catastrophic coverage. After this, you will only pay a 5 percent copay for your prescription medications for the rest of the year.
Questions to ask before enrolling in Medicare Part D
When deciding on a plan, keep these points in mind:
- Are the medications I’m currently taking covered?
- What is the monthly cost of my medications on the plan?
- How much do medications that not covered on the plan cost?
- What are the out-of-pocket costs: copay, premium, and deductibles?
- Does the plan offer extra coverage for any high-cost drugs?
- Are there any coverage limits that might affect me?
- Do I have a choice of pharmacies?
- What if I live in more than one place during the year?
- Does the plan offer multistate coverage?
- Is there a mail-order option?
- What is the plan’s rating?
- Is there customer service with the plan?
There are several other options to get prescription medication coverage.
Cost depends on your medications, the plan’s drug list, and out-of-pocket costs. It’s a good idea to compare plans to choose the best option for you, and Medicare lists organizations to help you choose based on your state.
Sometimes switching plans might make sense and save you money. Medicare helpers can guide you in deciding if another plan would be better than Original Medicare with Part D.
Tips for choosing a plan
Here are a few points to remember when choosing a plan:
- Rules for switching plans. You can only switch drug plans during certain times and under certain conditions.
- Options for veterans. If you’re a veteran, TRICARE is the VA plan and is generally more cost-effective than a Medicare Part D plan.
- Employer-based prescription plans. Check to see what’s covered by your employer’s healthcare plans to determine out-of-pocket costs compared with a Part D plan.
- Medicare Advantage plans (MA). Some Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs) Medicare Advantage plans cover costs for parts A, B, and D, and they may also pay for dental and vision care. Remember, you’ll still have to enroll in parts A and B.
- Premiums and out-of-pocket costs can vary. You can compare plans to see which offers you the best coverage for your specific medication and healthcare needs. Medicare Advantage plans might have network doctors and pharmacies. Check to make sure your healthcare providers are on the plan.
- Medigap plans. Medigap (Medicare supplemental insurance) plans help pay for out-of-pocket costs. If you bought your plan before January 1, 2006, you might have prescription medication coverage, too. After this date, Medigap didn’t offer medication coverage.
- Medicaid. If you have Medicaid, when you become eligible for Medicare, you’ll be switched to a Part D plan to pay for your medications.
Plan enrollment depends on:
- first time enrollment when you turn age 65 (from 3 months before until 3 months after you turn age 65)
- if you’re eligible before age 65 due to disability
- open enrollment period (October 15 to December 7)
- general enrollment period (January 1 to March 31)
You might be able to join, leave, or switch plans if you:
- move into a nursing home or skilled nursing facility
- relocate out of your plan’s coverage area
- lose medication coverage
- your plan doesn’t offer Part D services
- you want to switch to a higher 5 star rated plan
You can also change plans during open enrollment each year.
If you already have prescription medication coverage and it’s comparable to the basic Medicare Part D plan, you can keep your plan.
Although Part D is optional, if you choose not to sign up for a prescription benefit plan, you may pay a permanent late enrollment penalty to join later.
Even if you don’t take any medications now, it’s important to sign up for a low-premium plan if you want to avoid this penalty. You can always change plans as your needs change during open enrollment each year.
If you don’t enroll when you’re first eligible and don’t have any other medication coverage, a 1 percent penalty is calculated and added to your premium for the number of months you didn’t apply when eligible. This extra payment is added to your premiums for as long as you have Medicare.
There are other options for medication coverage instead of Part D. But coverage must be at least as good as basic Part D coverage.
You can have coverage from your employer, Veteran’s Administration (VA) plan, or other private plans. Medicare Advantage is another option that pays for medications.
You can enroll in a Medicare Part D plan during initial enrollment for Medicare parts A and B.
If your prescription drug plan isn’t meeting your needs, you can change your Medicare Part D option during open enrollment periods. These open enrollment periods happen twice throughout the year.
Medicare Part D is an important part of Medicare benefits. Choosing the right plan can help keep costs in check.
Once you choose a plan, you must stay in it until the next open enrollment period which starts on October 15. It’s important to choose a good plan that works for your needs.
Original Medicare with Part D allows you to visit specialists without referrals. Medicare Advantage plans might have networks and coverage area limits, but out-of-pocket costs might be lower.
To choose the best plan for your medication needs, review your costs and options carefully. Work with a helper to choose the best option even in deciding to switch plans.
If you don’t have internet access, you can call 800-MEDICARE for help in choosing a plan. You can also mention the plan you want and ask questions about coverage.
This article was updated on November 20, 2020, to reflect 2021 Medicare information.
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